Oil Week Ahead: Will Russia, Or Won’t It?

A week has already passed since the OPEC technical committee recommended that the cartel and Russia deepen the production cuts to balance out the demand reduction that will come from the coronavirus. And yet, Russia has yet to make a decision, stalling for time to see if the news flow from China will disprove OPEC’s worst-case scenario expectations now that the spread of the virus seems to have slowed down a bit (yesterday’s big revision notwithstanding).

After OPEC made its recommendation, Russia’s Energy Minister met with domestic oil producers, but they managed to avoid making a key decision until next week when the larger part of China’s industry - that has been shuttered during the coronavirus outbreak - is expected to start operating again close to normal capacity. The week ahead should bring a final response from Russia, even be it one that OPEC may not want to hear. Even if that happens, OPEC may still go ahead and cut its production, reaching a decision at the latest at its next scheduled meeting in Vienna at the beginning of March.

Car production contagion

The aftermath of the coronavirus is not dissimilar to cleaning the house after a raucous party, with a new damaged item found every day. In no industry is this more the case than with car producers where the disruption in the supply of smaller items and spare parts has or may yet force producers outside of China to briefly stop assembling cars while they look for alternative supplies.South Korea’s Hyundai has been one of the worst hit producers outside of China, but by next week it is likely to resume output, albeit below previous production levels. European car production is also not out of the woods yet – so far Fiat Chrysler has warned that one or two of its European plants may find themselves having to stop production for a time as component supplies dry up. So far production in North America has not been faced with serious problems with parts supplies even though most cars contain some components that are produced in China.

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